IRS Reminds Volunteers, VITA Participants of Compensation Rules

After recently receiving questions about the rules on how volunteers are paid including those participating in the Volunteer Income Tax Assistance program, the IRS has issued guidance on what is and is not allowed.

The agency said its position falls under the Volunteer Protection Act of 1997.

More than an estimated 540 credit unions participate in the IRS' VITA program, according to agency data. The IRS said it allows VITA partners to use federal grant funds to provide stipends to volunteers within the volunteer return preparation program. The stipends are a fixed amount of money paid at regular intervals as a salary or to cover living expenses.

VITA grant funds cannot be used to provide compensation for tax assistor/preparer screener or quality reviewer positions, the IRS reminded. However, seven other positions are eligible to receive salaries, wages and benefits as described in IRS publication 1084.

Debra Chandler, national CU relationship manager and senior tax analyst with the IRS, helps groups establish VITA programs. Chandler said while she is not sure what queries were recently asked, she suspects some of VITA's newest partners such as the AARP requested guidance on volunteer compensation.

"Credit unions have always been in compliance. They're used to being regulated and want to do the right thing," Chandler said. "Credit unions are fact finders. They have been good about checking and double checking."

Chandler said when the IRS conducts VITA training sessions each year, a segment is devoted to volunteer compensation rules. In addition to credit unions, the IRS works with more than 100 VITA partners including the United Way, Goodwill, Native American and Hispanic advocacy groups and historically Black colleges and universities.

In its most recent guidance, the IRS addressed liability protection for volunteers. The agency said with a few exceptions, no volunteer of a nonprofit organization or governmental entity shall be liable for harm caused by an act or omission of the volunteer on behalf of the organization or entity if the volunteer was acting within the scope of the volunteer's responsibilities in the nonprofit organization or governmental entity at the time of the act or omission.

Volunteers will also not be liable if the person was properly licensed, certified, or authorized by the appropriate authorities for the activities or practice in the state in which the harm occurred, where the activities were or practice was undertaken within the scope of the volunteer's responsibilities in the nonprofit organization or governmental entity. If the harm was not caused by willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed by the volunteer, that person would not be liable, the IRS said.